India: Weeks from Job 1, Tata chairman threatens to shutter Nano plant

By: Glenn Brooks, Friday, August 22, 2008,

Tags: Corporate Finance, Legislation, Manufacturing, OEM Strategy, Tata Motors.

AutomotiveWorld.com

Ratan Tata, the chairman of Tata Motors, said he is becoming so concerned by the threats to workers at the site of the Nano car plant in eastern India that he may decide to shift the facility to another location, Reuters reports.

The complex, from which the first ultra-cheap small car is expected to roll out in only a few weeks' time, is at the centre of a series of protests that have been turning increasingly violent. Recently, one Tata Motors engineer was reportedly hospitalised after his car was attacked with rocks as he tried to flee agitators.

"What has concerned us is the violence, the disruptions, that has led us to be concerned about the safety of our employees, our equipment and investment, and of the viability of the process," Tata told reporters in Kolkata, the capital of West Bengal, where the facility is located, at a press conference.

"If anybody is under the impression that because we have made this very large investment of 1,500 crore rupees (US$350m), that we would not move, then they are wrong, because we would move to protect our people," the chairman and company owner further stated, before adding, "I've made a major investment here ... to move will be at a great cost to Tata Motors and to shareholders."

The Communist-led government of West Bengal has welcomed the Tata investment but the plant has been built in an area of the state where many farmers feel they have been unfairly marginalised with the rezoning of adjoining land for industry. Further, some, on principle, have refused the state government's offer of payment for land that it took over to sell to Tata Motors.

At the time of the unveiling of the Nano as a prototype at the New Delhi Auto Expo in January this year, Ratan Tata stated that the manufacturing complex at Singur, which was to have an initial capacity of 250,000 units, would be the first, but not the only plant to make the little car.

"I hope West Bengal doesn't get characterised as a trouble spot, that it doesn't fall into the same category as some other trouble spots, where there is an urge to leave it alone and not make investments," Tata is further quoted as stating.

The West Bengal government, reportedly the world's longest serving democratically elected Communist regional authority, has started talks with Trinamool Congress, its main political opposition, and a party which is spearheading the protests, to try to resolve the dispute.

Mamata Banerjee, the leader of the opposition, is adamant that 400 acres (161 hectares) of farmland must be returned to farmers. The government says this is impossible.